This episode is rather long, more than 3000 words but is very informative. I suggest to save it for future reference.
The lack of any political control of the European Commission’s services has allowed civil servants to become autonomous and non-accountable. This anomaly is particularly reflected in the way tenders, projects, and programmes are funded by the bloc’s budget. Billions of euros are silent – without any transparency or oversight – moved into the pockets of the few chosen and well-connected, directly or indirectly, to the awarders of the relative contracts.
The award procedures, prima facie, seem legitimate, but for an expert like Laura Kovesi most of them could become the subject of a criminal investigation. Therefore, it would be wise for the Commission President to look at this…discrepancy…and fix it before the European Public Prosecutor takes over and brings order to her house without ever having been invited. Because in times of galloping decay, many things may happen.
The virus crisis is being used for the soft transition, with minimal collateral damage, to the new Western Civilisation. All Western societies will adapt to it and there is no way back. Whoever doesn’t adapt will disappear. This is nature, and this is our world.
In this context, if the President of the Commission does not take the control of the future of Europe into her hands, and she misses the unique opportunity to make all of the necessary changes to her Commission now, sooner or later it will fade out and she will pass into history as “the last president.”
At present, there is neither transparency nor accountability in the awarding of tenders. Tenders called directly by the European Commission are written in such a way so that only a few Brussels-based companies – the usual “clients” – can benefit.
Tender specifications are very complicated, which adds nothing to their substance, and are written in such a way that a company can only come out on top if has the otherwise useless and specialised personnel that is needed to interpret the tender’s specifications and write the proposal. The right contact, of course, in the relative department is the other prerequisite. In order to develop the necessary links with the potential tenders’ winners, concerned functionaries are extremely careful and limit their connection to usually one person through whom everything is settled.
When a tender is “dedicated” to a specific company, usually one or two other “friendly” companies participate in getting grading that is above 50%, while others, who are not part of “the plot”, receive less than 50%.
What happens next s is simple and easily predictable.
The tender is awarded to the “best” bidder which happens to the pre-determined chosen one. The other “friendly” bidders are set up to participate for sole purpose of losing. However, they are losing receiving little more than 50% which makes them eligible to appeal. Of course, they do not appeal. On the contrary, congratulate the winner and forget the whole thing. As for the others, those who spent several hundreds of thousands of euros to prepare the proposal and who could be the real winners, cannot appeal the decision because in the evaluation, they only received 49%, which is below the 50% threshold needed to have the right to complain. However, they must be happy because the Head of the Unit which carried the tender, him himself, with a very promiscuous attitude called and told them the next time they apply, to be careful in compiling their application!
It is worth mentioning that with this “patent” a highly esteemed Agency of the Commission, awarded to the same consortium (with the same composition using different names), and the same team leader, gets the same 4-year multimillion contract for the 4th time and the Commission sees nothing wrong.
Structural Funds are aimed at the development of public infrastructure in the Member States and at promoting economic, social and territorial cohesion. In matters of allocating funds, the procedure is relatively simple. At the political level (i.e. governments), the two big players – France and Germany – and “the system” informally decide how to split the big projects. This concerns more than half of the co-financed projects every year.
Once Structural Funds are allocated and major projects are assigned, the government of the big player concerned, often decides, which company will take each project.
Subsequently, the appropriate Commission services are informed. Immediately after this occurs, the cabinet of the interested Commissioner – of a big Member State, not every Commissioner – informs the Director-General responsible for the project what the decision was. The office of the Director-General then says that the government that was awarded the project, that the Commission thinks that a particular company is good enough to do the job. The information is passed discretely, via word of mouth, to the competent department and a functionary travels to the country that was awarded the project and informs – again, and always by word of mouth – the minister in charge.
The Director-General knows that if they disagree with the choice presented by the cabinet of the interested Commissioner that in the next rotation of Directors-general, if not before, they will be given an early retirement under Article 50 of the EU’s Staff Regulations. Each Director-General understands that by following the wishes of the bosses, everything will go smoothly and that they would be covered in case of a complaint. They also know that disobeying, this would signify the effective end of their career.
The minister of the Member State is aware that by following instructions he would be left a substantial amount of the money – usually anywhere from 20% to 50% – which was allocated for the project – to be distributed among local subcontractors to do the job. In case of any complaints, he, too, would be covered by “the system”. That minister also knows that in the case of a refusal, it is highly likely that the application for assistance for building the project will be eventually rejected, while the Department of Regional Policy of the Commission will send its auditors to look into some past project and recover a few hundred million euros.
The minister also knows that the biggest part of the funding is not paid to the subcontractors who do the job but is taken by the initial contractor. That part of the business will never be audited by anyone.
The difference between Structural Funds and the various programmes is simple and clear. With Structural Funds, serious amounts of EU money are channelled into the pockets of people who shouldn’t be receiving it. Yet, at the end of the day, an infrastructure project is done and the Member State, even if the project faced serious cost overruns, gets something – a highway, an airport, a railway, something real and tangible, which is useful for society and improves the lifes of ordinary citizens.
Infrastructure projects last and remain for future generations, even if during the implementation of the project the budget was overspent and bribes were flying in all directions.
The beauty of the EU’s programmes is that all money allocated, billions of euros every year is spent with little, if any, benefit to society through procedures that benefit only a few and with no transparency and no accountability. Indeed, the beneficiaries are certain types of “qualifying” organisations, such as universities, select municipalities, research and various centres, friendly NGOs, and selected private concerns, all of which, coincidently, have good relations with the awarding authority.
Beneficiaries get the money not because they necessarily have the top scientific capacity, but thanks to the ability they have developed to handle complicated and mostly useless bureaucratic procedures and formalities and to fill in the application documents adequately.
Competing bidders may have two or three Nobel Prize winners on your team, but since in your 600-page project proposal couldn’t comply with the formalities and you are not among the “chosen ones” you will be disqualified, Therefore, it is necessary to hire a group of so-called “experts” to write the proposal. Such “experts” have in fact as sole area of expertise – their knowledge of the Commission’s bureaucracy. It is not rare that they also have the proper contacts among Heads of Unit and Case Handlers.
As to the benefits for the Commission staff, it is mostly about justifying their otherwise useless existence and building a nice career with all the “goodies” – great tax-free salaries, fringe benefits, friendships, and power. In the Neapolitan dialect, they say “u cummanà è meglio che fottere.” (to rule is better than f—ing)
There are several EU programmes worth several billion euros each, such as Horizon 2020, LIFE, MEDIA, MOBILITY, ERASMUS, COSME etc., but very few people can effectively participate in most of them with reasonable chances of being selected. Information is available in huge quantities, but it is vague and only those specialising in bureaucracy, and with some links to “the system” can decipher what the terms are and compete successfully.
In the past, projects used to be assigned proportionately to Member States using certain objective criteria. Under this practice, local authorities invited national calls for tenders and assigned the various projects of a specific programme. The various Commission departments in charge were limited to doing the audits.
However, using various arguments like the fairy-tale that corruption only exists in the individual Member States and no cases of misconduct or double-dealing can be found in the European Commission (!), “the system” managed to obtain control over the allocation of these funds. As a result, with the exception of MEDIA and ERASMUS, the Member States are excluded from the process of distributing the funds to beneficiaries. This privilege was transferred to the Commission services and the money is distributed to the “chosen” few, by the Commission.
It makes no difference whether the playmaker of this loot is, for example, the head of a unit for the Director-General of Energy, who managed to build up their own kingdom within “the system” by holding on to their sensitive post for decades, or a Commission delegation. It is the Commission in its entirety that European citizens consider responsible for the loot.
It is also worth mentioning that in the context of taking over the distribution of funds for programmes, “the system” has created numerous “agencies” scattered throughout the Member States which, in some cases, handle significant amounts of money. This was a particularly intelligent move because in this way the hosts in that particular Member State believe that by hosting an agency they might influence future audits. This isn’t the case, however, as the agencies are the long arm of the Commission and are present in that Member State to achieve things that the Commission cannot do itself. All the while, they only have therapeutic effects on the actual host Member State.
The Commission controls everything. It decides on the project parameters, issues the calls for tenders, assigns and subcontracts the projects, has oversight of the monitoring and auditing, etc. Most importantly, it is never held accountable.
It is a common characteristic of all the programmes that many of their elements leave ample room for arbitrary interpretation. Procedures are very complicated and lengthy with a lengthy interval between the proposal’s presentation and payments. In this way, while awards are limited to a small number of candidates, among them the various projects of each programme are assigned on a rotation, transparency is far from being served.
A second and equally important characteristic of all of the programmes is that once a call for proposals is issued and an ordinary potential beneficiary decides to participate and submit a proposal, if it is rejected it will never be told the reasons for the denial. They are told, however, what they have to improve. In addition, there is no way to appeal a rejection. In the past, this type of management was only widely used by the Soviet Union Now it is only used by the European Commission and certain sub-Saharan countries.
It is also worth noting that despite the fact the EU has 27 Member States, a large part of each programme – sometimes more than half of the programme’s funds – ends up being awarded to beneficiaries originating from only two or three countries, e.g., 60% of LIFE projects are awarded to Italian and Spanish concerns.
The reason for this might not be unrelated to the fact that in the Commission’s LIFE units Italians and Spaniards occupy the most crucial positions. The two ruling Member States, in particular Germany, are not entirely left behind as their companies have branches or subsidiaries all over the bloc who enter in joint ventures with locals.
All programmes are characterised by unprecedented useless bureaucratic procedures. As a result, nobody cares about the specific projects’ results and nobody ever asks if the project had any significant impact on society. Usually, once completed, the projects are sealed into a filing cabinet and forgotten forever.
In fact, their only utility is to serve the beneficiaries of the project and not the society. For example, a university lecturer who happens to be the project’s scientific director will benefit from one or two otherwise meaningless scientific publications or papers that present the project’s results. Such papers will be added to the professor’s CV and will certainly boost its scientific career. Furthermore, he will be able to favour a few associates by enrolling them in the project and thus offering them the possibility to be paid twice (their university salaries and project fees) for tasks they were routinely doing during their academic assignments.
All EU-funded projects require beneficiaries to offer their “own participation,” i.e. an amount that the applicant must contribute to cover part of the costs. In practice, most beneficiaries effectively cover their participation through their own staff costs by simply exaggerating their role in the project on the record of their employees’ time-sheets.
On the Commission’s side, they only worry about awarding projects to their usual customers and make sure that the bureaucratic procedures are carefully observed. In other words, nobody cares for the substance of the projects or assesses the need for such spending to the people.
The real purpose for the projects is that “the system” in its various forms and ramifications (Commission Units and the Executive Agencies) through a highly sophisticated and demanding bureaucratic methodology, distributes money at will to selected recipients. As for the real impact of this huge investment, most of those projects have no commercial value and very limited possibilities of surviving in the environment of a private market.
To summarise, “programmes” are a classical European Commission-style mechanism to distribute money to the “usual clients”. Thus, a whole community of academics, consultants, experts etc., live off of this money.
The Commission is hermetically sealed and “outsiders” are discouraged from participating. Which means, why qualified ordinary companies would they bother to participate when they know in advance that the rate of acceptance for a proposal is less than 10% (less than 10 out of 100 proposals will eventually be financed) and that a handful of countries will get 60% of that money while the rest goes to the small cabal of Brussels-based and well-connected companies – the usual clients?
There is also a full arsenal of bureaucratic controls, based on an absurd system of regulations that only a few people know how to handle. The purpose here is to feed an army of experts – i.e. consultants specialising in writing proposals, others specialising in evaluating proposals, then others who perform “monitoring” on behalf of the Commission, and those who can interpret the regulations. And on top of all those is a diverse variety of auditors who specialise in auditing projects. Those who audit the Commission officers’ work, and those performing ex-post audits… It is a full army of people totally useless, just as useless as most of the projects themselves.
If you’re still not convinced, just ask the Commission what percentage of these projects’ findings end in some way in the real economy, in the market – half of them? 20%? 10%? In fact, the proportion of useful projects is not published, and for a good reason. It’s in the range of statistical error.
Von der Leyen can save it
Tenders, programmes, and projects are all a Catch-22 for European citizens and the Member States. No matter what they do, no matters how they react, no matter if they appeal – provided they are not technically disallowed, they have no chance. They are all legally cornered by an artificial legitimacy set by “the system”, whose only purpose is to exclude the intruders and do things in its own way.
This deplorable situation can be easily corrected as it is only based on procedural traps and pitfalls set by the services so as to exclude valiant competitors and assign the business to their own chosen few.
To this effect, this proverbial Gordian Knot can be solved in two moves.
Make rules simple and which can be easily fulfilled by companies that meet the substantial requirements (experience, staff, etc.), without employing special writers to fill-in useless forms and place the entire procedure under the direct supervision of the European Parliament.
In this way, the European Commission will restore its lost credibility in the Member States. This is very important for its long-term survival. Trust, credibility, and respect for the institutions are the keys.
A special committee must be established in the Parliament to supervise all calls for tenders as well as for programmes and project assignments. Furthermore, there must be supervision by the European Parliament with the authority to fire and refer employees to justice official those who violate the bloc’s clearly pre-defined (and new) legal and moral rules.
The same committee will review and approve, with the assistance of outside experts from the Member States specifications without deviating from the substance of the call. In this context, the Parliament’s committee will eliminate or minimise useless bureaucratic procedures that limit the participation of eligible participants, while substantially increasing the proposals’ writing costs. Programmes that must be transferred back to the Member States should be under the direct supervision of the European Parliament Special Committee.
Among the specifications for the awards of the programmes, a new requirement must be added that will have a high coefficient in the proposal evaluation – its usefulness for society and how it will be used by the industry to the benefit of citizens. Obviously, a proposal aiming for the invention of a simple drinking water refinery for households with low operational costs will certainly get a better rating than a proposal for the scientific research on how climatic changes affect the tint of chrysanthemums.
The solution to this major drawback is simple, very simple – simplify the specifications and procedures, have direct supervision by the European Parliament, and introduce the principle of value for money.
(to be continued).